Is Transferring the Home Loan Worth It?

by Anamika Verma on Friday 29 September 2017, 12:03 PM | Category: Loans & Investment| View: 206 views
 
 
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Some people spend their entire life in saving money to buy a house, but due to the expenditure on financial crisis or emergencies, the desire to buy a house feels impossible. In such situations, many people recommend opting for Home Loans. Home Loans can be the much needed financial aid for a person to buy a house. It covers not only the financial gap but also the miscellaneous expenses of buying a house.

Home Loans can be availed from any financial institution and to apply for a Home Loan, you need to qualify the eligibility parameters set by the lender. The lender's eligibility criteria may include things like good credit score, income proof, employment history, banking history and a proper valuation of the house.

 

Due to many reasons, people think of getting rid of their Home Loans as soon as possible. One of the most common reasons is high-interest rates applied by the lender. As Home Loans have high principal amounts involved, the interest rate can also result in high amount. The best way to get rid of the high-interest loans is to apply for a Home Loan balance transfer.

What is a Home Loan Balance Transfer?

A Home Loan transfer is a provision offered by the financial institutions which allow you to change your lender during an ongoing loan. When you apply for a Home Loan balance transfer, your outstanding loan amount gets shifted to the new lender, and you can pay the remaining loan to the new lender.

Is it Worth Applying for a Balance Transfer?

To make sure that a balance transfer is beneficial, you need to consider the following points.

Interest Rate: The High-interest rate is the most common reason for transferring balance. The applicants usually change their lenders when they get loans at a lower interest rate. If you are applying for a balance transfer, it is important that you look at the interest rate margin difference between the old lender and the new lender.

Processing Fees: The Home Loan balance transfer process is similar to the Home Loan application procedures. When applying for a balance transfer, you will need to pay a processing fee, which can range from 0.5 percent to 1.5 percent of the outstanding loan amount. You need to be careful when you pay the processing fee as it cannot be refunded.

Terms and Conditions: As low-interest rates can be alluring, it is important that you check the terms and conditions of the lender before applying. You need to check for the closing charges, lock-in period and payment default penalties.

Other Perks: When you shift your Home Loan to a different lender, the lender may offer you perks like breathing period that helps the applicants to manage their finances. You can also look for the perks like zero lock-in period, minimal default penalty charges and lower processing fees.

According to the new RBI regulations, the interest rates on Home Loans have been lowered. This can be a good opportunity for applicants stuck with the high-interest rate.

 

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